Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

1. Introduction to Accounting

Fundamental Accounting Equation

Financial Accounting

1. Introduction to Accounting

Fundamental Accounting Equation

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Multiple Choice

Which equation expresses the fundamental accounting equation?

Assets = Revenues - Expenses

Assets = Liabilities + Equity

Equity = Assets - Revenues

Liabilities = Assets + Equity

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Verified step by step guidance

Step 1: Understand the fundamental accounting equation, which is the foundation of financial accounting. It represents the relationship between a company's assets, liabilities, and equity.

Step 2: Recall that the fundamental accounting equation is expressed as: Assets = Liabilities + Equity. This equation ensures that a company's financial position is balanced.

Step 3: Analyze why the other options provided in the problem are incorrect. For example, 'Assets = Revenues - Expenses' is not correct because revenues and expenses are part of the income statement, not the balance sheet. Similarly, 'Equity = Assets - Revenues' and 'Liabilities = Assets + Equity' do not align with the fundamental accounting equation.

Step 4: Recognize that the correct equation, Assets = Liabilities + Equity, reflects the balance sheet structure, where assets are funded by liabilities (debts) and equity (owner's investment).

Step 5: Apply this equation in practice to ensure that all transactions maintain the balance between assets, liabilities, and equity, which is crucial for accurate financial reporting.